Anyone who uses New York's JFK and LaGuardia airports is depressingly aware of why airline passengers consistently rank them among the world's worst. No wonder that passenger traffic at the two facilities has grown only moderately during the current economic boom, while employment has actually declined at JFK and barely increased at LaGuardia—even as jobs and passenger traffic at Newark and other airports around the country are booming.
In March, Mayor Giuliani blasted the Port Authority of New York and New Jersey—the bi-state agency that has operated the airports since 1947—for the failings; and he advanced a plan to have the city take over the two facilities by forming a new agency, the Airport Improvement Corporation. Acutely aware that his term will expire long before the airport leases do, the mayor is trying to build political momentum now for a city takeover. Those vying to succeed Giuliani should embrace his plan; the city's economic future may depend on it.
The airports are the Port Authority's cash cows. Together they have thrown off more than $125 million in profits in each of the last five years—without which the Authority would have lost money in all but one of those years. The airports have helped subsidize big losses—collectively more than $200 million a year—on the PATH trains and the Authority's bus terminal, both of which primarily serve New Jersey commuters.
The JFK and LaGuardia profits have also helped subsidize improvements at Newark Airport, also run by the Port Authority. In the current fiscal year, for instance, Newark is getting $314 million in new spending, compared to $58 million at LaGuardia and $107 million at JFK. The city's current deal with the agency is so bad that whatever money the Port Authority invests in the New York airports is deducted from the rent that the Port Authority pays to the city, which is the actual owner of LaGuardia and JFK. In 1990, the Authority paid the city $54 million in rent. But this year, with more spending taking place, it will pay only about $19 million.
Any way one looks at this, the current situation is a bad deal for New York. The airports have clearly suffered from a lack of investment, poor planning, and the Authority's decision to concentrate much of the regional growth in air traffic over the last decade at Newark Airport. Not only have the profits of the city's airports been used to spur their cross-Hudson rival, instead of to improve their own competitive appeal, these profits have funded various of the Port Authority's state-capitalist projects that have nothing to do with its central transportation mission, including its forays into real estate.
The Authority, run as it is by two states, will never be in a position to decide what is best for New York City. And, as the mayor points out, the agency is a powerful political lobbying machine, a "conglomerate that serves no master."
The mayor's plan involves folding seven city agencies that currently have some involvement with the airports into a single entity that would begin working on a master plan for JFK and LaGuardia and would audit the Port Authority's performance over the remaining 14 years of its lease. As part of the plan, BAA-USA, which manages such well-run airports as London's Heathrow, and which last year won a city-run competition to operate the airports when the Port Authority's lease is up, would sign a consulting contract with the new airport improvement agency to help it design a long-term strategy.
Gotham always seems to be the loser where the Port Authority is concerned. Take the Authority's recent attempt to privatize the World Trade Center, its most spectacular real-estate distraction, after six years of trying, by leasing it for 99 years. In its failed deal with developer Steven Roth, the agency agreed that the formerly tax-exempt monument to state capitalism would return only in part to the city's tax rolls, and that the Authority itself would pay a substantial portion of whatever the tax burden might be. So not only does the city fail to get its full tax payments, but it must watch the profits from its airports in effect go to subsidize whatever payments it does receive—adding insult to injury.
Fortunately, the bum deal with Roth fell through. At press time, the Port Authority was negotiating to lease the WTC to developer Larry Silverstein. One can only hope the property tax subsidy is not part of any deal. That's $70 million a year that could be going—as it should—to improve New York's dreadful airports.
